Mental Hygiene Law Article 81 Matters

Staff within the Guardianship and Fiduciary Support Office (Room 221) process all matters relating to Article 81 of the Mental Hygiene Law. Any interested person (as defined by Section 8106 of the Mental Hygiene Law) of sound mind over the age of 18 has the right to petition the court in the proper jurisdiction for an order directing the appointment of an adult guardian for a person who, because of infirmity, is alleged to be unable to manage his or her affairs or properly to take care of his or her person. At the application stage the allegedly infirm person is known as the Alleged Incapacitated Person ("AIP"). An application may be made to the court by order to show cause or notice of verified petition and supporting papers. Article 81 defines the procedures to be followed. The AIP has various rights and may request the court to appoint legal counsel to represent him or her.

Pursuant to Article 8.10( c ) the court shall appoint counsel in the following circumstances unless the court is satisfied that the AIP unless is represented by counsel of his or her own choosing:

The person alleged to be incapacitated requests counsel;

The person alleged to be incapacitated wishes to contest the petition;

The person alleged to be incapacitated does not consent to the authority requested in the petition to move the person alleged to be incapacitated from where that person presently resides to a nursing home or other residential facility as those terms are defined in section two thousand eight hundred one of the public health law, or other similar facility:

If the petition alleges that the person is in need of major medical or dental treatment and the person alleged to be incapacitated does not consent;

The petition requests the appointment of a temporary guardian pursuant to 81.23 of Article 81;

The court determines that a possible conflict may exist between the court evaluator's role and the advocacy needs of the person alleged to be incapacitated:

If at any time the court determines that appointment of counsel would be helpful.

If the court appoints counsel under this section, the court may, nevertheless, appoint counsel if the court is not satisfied that the person is capable of making an informed decision regarding the appointment of counsel.

Typically, in the order to show cause the court appoints an individual as a court evaluator to investigate the circumstances of the alleged incapacity and report in writing to the court. Such a person may be an attorney, a physician, a psychologist, an accountant, a social worker, a nurse or any other person properly trained and suitable to perform this task. Under certain circumstances, the court may decide to appoint counsel to protect the interests of the AIP. A hearing is scheduled for no later than 28 days from the filing of the OSC.

At the hearing, evidence is presented on the questions of whether or not the AIP is incapacitated and, if so, what is the best and least restrictive solution to safeguard the AIP and his or her interests. The court will decide these questions expeditiously, often at the conclusion of the hearing on the record, and will often sign a short form decision reciting that the findings required by Article 81 were made on the record. If a guardian is to be appointed, the court will have to set out who the appointee is to be, what role the person will have, any limitations that will constrain the person, and other particulars. The duration of the appointment may be unlimited or for a defined period.

If a Guardian is appointed, he or she will give an oath and receive a commission from the Clerk of the Court. These are included in the form identified above.

After a hearing on the appointment of a Guardian, and after decision on an application to remove a Guardian, for a discharge by reason of the death of the Incapacitated Person ("IP"), or to substitute someone for the original Guardian -- perhaps the most common Article 81 matters -- the court will order settlement of a judgment in the case of an appointment of a guardian ( Click Here) or (ii) an order in the case of the other applications (a judgment already being in existence in those instances). The staff of the Guardianship/ Fiduciary department will review proposed judgments, orders and any counter-orders in these cases, as well as any initial, intermediate, annual or final accountings ( Click Here). Counsel should present these to that office. (A final accounting is issued when a guardian has no further role to play, as when all funds have been depleted, the guardian has been replaced, or the IP dies. An interim accounting covers financial transactions for a certain period; when a final accounting is eventually rendered, it will have to cover the period embraced by the interim accounting. An intermediate accounting also covers a defined period, but a later such accounting or a final accounting will only have to pick up and account for the period commencing from the end of the period covered in the intermediate accounting. The Guardian must obtain an order from the court settling and approving all accountings.) In an accounting, the Guardian must show, in detailed schedules, all income, expenses on behalf of the IP, assets, their disposition, and the like. Where there are defects, the staff will communicate with the submitting party and request corrected submissions. When the papers are in final form, the staff will transmit them to Chambers of the Justice assigned.

Article 81 contains educational requirements for guardians and court evaluators. The Association of the Bar of the City of New York and the New York County Lawyers' Association periodically offer classes for such persons and generate a list of those who complete such courses. Those who complete them are certified by the Unified Court System. The schedule of these classes may be obtained by contacting the office of Guardianship & Fiduciary 914-824-5770 ( GFS@courts.state.ny.us ) or contacting the guardianship / fiduciary office of Bronx County at 718-590-4760.

B: COURT RULES AND THE FIDUCIARY CLERK

In all matters under Article 81 and all other matters involving fiduciaries, certain court rules must be scrupulously followed. The court must be alert to see that required forms are filed in each case. Compliance with these filings is monitored by the Fiduciary Clerk, who is located in Room 148.

Part 36 of the Rules of the Chief Judge applies to appointments of, among others, a guardian, guardian ad litem, court evaluator, and attorney for an AIP, as well as a receiver, referee, and person designated to perform services for a receiver. Section 36.1. Such appointments shall be made from a list established by the Chief Administrative Judge. Section 36.2 (b) (1). The Justice may make a designation from outside the list upon a finding of good cause, but in such case must place the basis for the appointment shall be set forth in writing and filed with the Fiduciary Clerk. Section 36.2 (b)(2).

Part 36 prohibits, among others, relatives of judges, employees of the Unified Court System, and certain persons connected with a political party or involved in a candidacy for judicial office from being appointed. Section 36.2 (c). No receiver or guardian may be appointed as his or her own counsel, nor may a person associated with his or her law firm, absent a compelling reason. Section 36.2 (c) (8). The attorney for the AIP shall not be appointed as guardian, or counsel to the guardian, of that person. Section 36.2 (c)(9). No court evaluator shall be appointed as guardian for the AIP except under extenuating circumstances that are set forth in writing and filed with the Fiduciary Clerk. Section 36.2 (c)(10).

No person or institution is eligible to receive more than one appointment within a calendar year for which the anticipated compensation to be awarded in any calendar year exceeds $15,000. Section 36.2 (d)(1). If a person or entity has been awarded more than an aggregate of $ 50,000 during any calendar year, the person or entity shall not be eligible for compensated appointments by any court during the next calendar year. Section 36.2 (d) (2). These limitations do not apply where the appointment "is necessary to maintain continuity of representation of or service to the same person or entity in further or subsequent proceedings." Section 36.2 (d)(4).

All appointees must complete a Notice of Appointment and Certification of Compliance (OCA forms) and submit them within 30 days to the Fiduciary Clerk. Section 36.4 (a). Prior to approving compensation of more than $ 500, the Judge must receive from the Fiduciary Clerk an approval of compensation form endorsed by the Fiduciary Clerk confirming the appointee's compliance with Part 36. The Rules of the Chief Judge prohibit the awarding of fees unless there has been compliance with the fiduciary rules. Section 36.4 (b).

If the fees to appointees under Part 36 are $5,000 or more, the Justice must provide a written explanation of the reasons therefor, which is to be filed with the Fiduciary Clerk along with the order approving compensation. Section 36.4 (b)(3).

Part 26 of the Rules of the Chief Judge requires that a Justice who has approved compensation of more than $ 500 shall file with the Office of Court Administration the week after approval a statement of compensation on a form authorized by the Chief Administrative Judge. The appointees covered by Part 26 include guardians, court evaluators and counsel for an incapacitated person, as well as guardians ad litem, referees, counsel and receivers.

All fiduciary forms are prepared by the Guardianship / Fiduciary Office. For access to this sheet and forms. The Rules of Part 36 and Part 26 often lead to confusion on the part of guardians and others. Any inquires as to the need of seeking court approval of an appointment or compensation to an appointee should be directed to the office of Guardianship & Fiduciary 914-824-5770 ( GFS@courts.state.ny.us ) or contacting the guardianship / fiduciary office of Bronx County at 718-590-4760.

The Fiduciary Clerk maintains a database for tracking the filing by appointees of the required fiduciary forms. All original fiduciary forms are mailed to the Office of Court Administration, where a statewide centralized database of reported appointments and approvals of compensation is maintained.

C: COURT EXAMINERS

The Guardianship / Fiduciary office is responsible for monitoring the filing of initial and annual accounts by Article 81 guardians and the review of examinations of accounts made by Court Examiners, who are charged by Article 81 with the review of the guardians' accounts for accuracy, propriety, etc. This process is overseen by the Appellate Division, First Department Annual accounts and examinations of accounts are filed in the office. Copies of appointing orders, fee orders and other orders of relevance to the appointment, powers and compensation of the guardian are sent to the us by Justices or their staff. The Guardianship / Fiduciary office staff enter relevant data from these orders, accounts and reports into a comprehensive guardianship database, which is accessible to Justices and court personnel concerned with guardianship matters. The database has the capacity to record and report on all case milestones, appointing orders, fee awards, annual financial summaries and fiduciary compliance.

Court Examiners are attorneys and accountants with expertise in guardianship law and fiduciary accounting who are designated by the Presiding Justice of the Appellate Division to examine reports filed by guardians. The list of Court Examiners is established and maintained by the Appellate Division who supply us with the list of approved court examiners. Upon the submission of a proposed Order and Judgment Appointing a Guardian, the Guardianship / Fiduciary office insert the name and address of the court examiner to be appointed on the particular case. The OCE maintains the list of Court Examiners. Court Examiners are randomly designated in a particular case by the clerks when the Order/Judgment is forwarded to the Judge for determination. The Order and Judgment appointing a guardian details the duties, obligations and powers of the guardian of the person and the powers of the guardian of the property. The guardian must "qualify" immediately after the receipt of the Order and Judgment. To qualify, the guardian must file with the County Clerk a bond (unless waived by the court) and oath and designation of Clerk. Within five days thereafter, a commission must be issued by the County Clerk. The commission is typically prepared by the guardian, his/her attorney or the petitioner's attorney. In some instances, the court may allow a combined Order and Judgment and Commission (see form discussed above). As noted, the guardian must comply with Parts 36 and 26 of the Rules of the Chief Judge and file the requisite fiduciary forms. The guardian should be thoroughly familiar with the terms of the order and should seek clarification when necessary.

Shortly after the guardian's appointment, the Court Examiner will contact the guardian to review the guardian's duties and obligations. The Examiner will typically request a copy of the order of appointment and/or commission, the Court Evaluator's report and other documentation relevant to the guardianship. The guardian or his/her attorney must serve copies of all reports and applications for fees or other relief on the Examiner. The guardian must cooperate with the Court Examiner at all times. The guardian-Examiner relationship is not intended to be adversarial. However, the Examiner has the power to recommend to the court a reduction in guardian compensation or removal of the guardian when warranted. Pursuant to Section 81.32 of the Mental Hygiene Law, Court Examiners are required to examine and report on initial and annual accounts filed by guardians. The initial reports are filed and reviewed by staff in The Guardianship / Fiduciary office. A copy of the initial report shall be mailed to the court examiner.The law requires the guardian to file an initial report within ninety (90) days of receiving a commission.

The filing of initial report and annual reports is monitored by the Guardianship / Fiduciary office and Court Attorney / Special Referee's who have been assigned the department. The Court Attorney / Special Referee's monitor the timely filing of proposed Orders / Judgments, accounts (initial, annual, final ) and any other order directed by a guardianship Judge.

Failure to comply with an order of the court will result in an appearance at a compliance conference before the Court Attorney / Special Referee's. The Court Attorney / Special Referee's will make recommendations to the assigned Judge for removal for failure to comply with court orders. The Court Attorney / Special Referee's mission is to provide assistance guardians and court examiners who have been appointed to oversee the person and property of the incapacitated person.

The initial report must include proof of guardianship education and steps taken to fulfill guardianship requirements. If the guardian has been granted powers with respect to property management, the guardian must include in this report a complete inventory of resources over which the guardian has control, the location of any will, and the plan for management of such property. If the guardian has been granted powers regarding personal needs, the guardian should indicate the dates of visits to the ward, what the guardian has done to provide for the ward's personal needs and a plan for meeting those needs. If the initial report includes any recommendations concerning the need to change any powers authorized by the court, the guardian must apply to the court within ten days of the filing of the report on notice to all persons entitled to notice. The initial report is filed with the Guardianship / Fiduciary office, Room 221.For further information, please see Section 81.30 of the Mental Hygiene Law.

Article 81 requires the guardian to file an annual report with the court by May 31st of each year. The report should be filed with the Guardianship / Fiduciary office, Room 221, and can be submitted any time after January 1st. A copy must be served on the Court Examiner assigned to the guardianship, the IP, the surety and, if the IP is in a nursing home or other rehabilitative facility, the director of the facility and the Mental Hygiene Legal Service.

The first annual report should cover the period beginning on the date the guardian was commissioned and end on December 31st of that year. All subsequent reports must cover the previous calendar year from January 1st through December 31st. The report includes a financial accounting, a social and medical summary and a current medical report from a qualified professional who has evaluated the ward within the three months prior to the filing of the annual report. See Section 81.31 of the Mental Hygiene Law for further information.

The financial section of the annual report should include the following schedules of financial activity: Principal Received; Additional Principal Received; Realized Increases on Sale of Property; Unrealized Increases; Income Received; Disbursements; Realized Losses on Sale of Property; Unrealized Losses; and Account Summary. Some accounts include real and personal property in a separate schedule.
The guardianship training program will provide detailed information on the preparation of the annual account. If needed, additional help should be sought from an attorney, an accountant or the Court Examiner. The Court Examiner will reject the account if it is not in proper form.

The annual account will be reviewed by the Court Examiner and the guardian will be examined under oath concerning financial and personal matters relevant to the guardianship. (Pursuant to a memorandum from the Clerk of the Court, Appellate Division, First Department, that took effect May 5, 1991, in all estates with assets up to $50,000, the examination will be made every two years. In estates with assets of over $50,000, the examination will be made annually.) The examiner will require back-up documentation, such as cancelled checks, brokerage statements, bank statements, bills, invoices, receipts, etc. to audit the account. It is therefore incumbent upon the guardian to maintain accurate records of all financial activity. Additionally, the Examiner will request a copy of any order awarding guardian compensation, attorney and accounting fees, the purchase or sale of real property or any other order pertinent to the guardianship. As a rule, guardians should not take compensation or pay legal or accounting fees without court authorization.

The Examiner will submit a completed report to the with the Guardianship / Fiduciary office, Room 221. The report will include a proposed order confirming the report, a summary of the guardianship, including the medical and social condition of the IP, and details regarding the appointment of the guardian, a financial summary of the accounting period, a review of all income and disbursements, recommendations for actions to be taken by the guardian, a verified transcript of the guardian's testimony, copies of the order and judgment appointing the guardian and orders approving fees and commissions and a copy of the guardian's annual account and recent medical evaluation.

The staff of the with the Guardianship / Fiduciary office, Room 221 will review the Examiner's report and proposed order and forward it to the assigned Justice for their determination.

Pursuant to Section 81.33 of the Mental Hygiene Law, a guardian may request permission or be required to file an intermediate or final account.

D: RECEIVERSHIP AND TRUST ACCOUNTINGS AND GENERAL ASSIGNMENTS FOR THE BENEFIT OF CREDITORS

The Guardianship and Fiduciary Support Office handles receivership and trust accountings, and final accounts in general assignments for the benefit of creditors. Likewise, all long form orders disposing of motions to settle such accountings are to be submitted to the Guardianship / Fiduciary office, Room 221. All proposed orders that are requested the establishment of supplemental needs trusts ( SNT ) are also submitted to this office. This included compromise orders that are also requesting permission to establish an SNT as part of the settlement.

Fiduciaries must pay close attention not only to the authority granted to them in the order of appointment, but also to the law and rules governing these assignments, appointments, filings, etc. Fiduciaries must comply with the requirements set out in Parts 26 and 36 of the Rules of the Chief Judge and Judiciary Law 35-a. In addition to other authority, receivers should follow CPLR Article 64, CPLR 8004, BCL Article 12, and Uniform Rule 202.52; assignees should follow the Debtor and Creditor Law and Uniform Rule 202.63; and trustees should follow CPLR Article 77 and Uniform Rule 202.53.

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